VENEZUELA; A CASE STUDY by SUSAN JANELL WILKERSON Presented to the Faculty of the Graduate School of The University of Texas at Arlington in Partial Fulfillment of the Requirements for the Degree of MASTER OF ARTS IN POLITICAL SCIENCE THE UNIVERSITY OF TEXAS AT ARLINGTON May 2012 Copyright © by Susan Janell Wilkerson 2012 All Rights Reserved ii ACKNOWLEDGEMENTS Special thanks to my Father for stressing the importance of an education and my Mother for all her time as “Buela”. I would also like to thank my thesis advisor and thesis committee for all of the help. And always, thank God. March 2, 2012 iii ABSTRACT VENEZUELA; A CASE STUDY Susan Janell Wilkerson, M.A. The University of Texas at Arlington, 2012 Supervising Professor: Dale Story A case study of Venezuela is provided to test Marxist theory of political development. The first hypothesis is: three characteristics are inherent in any politically developed nation-State: There is an inherent class divide in society and this divide is based upon the ratio of wealth produced to wealth distributed by the modern industry; the existence of this class divide has existed throughout history and has led to political dictatorships of a small possessing class over a large proletariat class; as developments in the world market increase an individual‟s awareness in global society, the proletariat class organizes to abolish the dictatorship of a small possessing class over a large proletariat class and institute a more equitable ratio of wealth produced to wealth distributed. iv Because the evidence provided by the case study of Venezuela supports the first hypothesis, Marxism combined with more resent research is used as a framework for testing the second hypothesis. The second hypothesis is: the nationalization of the oil industry created a positive correlation between the market value of petroleum and the stability and sustainability of Venezuela‟s current socialist democracy. Because the ratio of wealth produced to wealth distributed in Venezuela is primarily dependent on profits made by the oil industry, it is hypothesized the oil industry will play a significant role in the stability of the nation‟s socialist democracy. Marxist theory combined with the work of more recent academic research concerning the sustainability of “redistributive” democracies, is used to analyze quantitative and qualitative trends in the market value of petroleum and measures of democracy. The data supports the finding that the nationalization of the oil industry created a positive correlation between the market value of petroleum and the stability and sustainability of Venezuela‟s current socialist democracy. v TABLE OF CONTENTS ACKNOWLEDGEMENTS ............................................................................................... iii ABSTRACT ....................................................................................................................... iv LIST OF ILLUSTRATIONS ............................................................................................ vii LIST OF TABLES ........................................................................................................... viii Chapter Page 1. INTRODUCTION……………………………………..………..….. ................. 1 2. MARXISM ......................................................................................................... 5 2.1 Marxism as a Theory ............................................................................. 5 2.2.1 Applied Marxism .................................................................. 13 3. 1920 – 1976; DICTATORSHIP TO DEMOCRACY ...................................... 19 4. THE IMPACT OF OIL ..................................................................................... 42 4.1 Definitions ........................................................................................... 43 4.2 Methods ............................................................................................... 70 4.3 Quantitative Analysis ........................................................................... 73 4.4 Qualitative Analysis ............................................................................. 75 5. CONCLUSION................................................................................................. 89 APPENDIX A. FIGURE 17 ....................................................................................................... 91 B. CHARTS: CITATIONS AND RAW DATA.................................................... 92 vi REFERENCES .................................................................................................................. 99 BIOGRAPHICAL INFORMATION............................................................................... 104 vii LIST OF ILLUSTRATIONS Figure Page 1. Western Hemisphere Proven Oil Reserves ................................................................... 15 2. Venezuela‟s Oil Production and Consumption ............................................................. 16 3. Poverty Headcount at National Poverty Line ............................................................... 49 4. Inversion Publica en Educacion .................................................................................... 50 5. Public Spending on Education ...................................................................................... 51 6. GDP .............................................................................................................................. 52 7. Literacy Rate, adult total ............................................................................................... 53 8. Primary Completion Rate, total .................................................................................... 54 9. Percentage Difference between Presidential Candidates .............................................. 59 10. Electoral Process, Pluralism ....................................................................................... 62 11. Political Rights, Civil Liberties .................................................................................. 63 12. Fitzgibbon Index ......................................................................................................... 66 13. Economist Intelligence Unit Overall Rankings .......................................................... 68 14. Pre-nationalization Correlation ................................................................................... 74 15. Post-nationalization Correlation ................................................................................. 74 16. Government Expenditures as per cent of GDP ........................................................... 92 viii 17. Oil Prices and Events .................................................................................................. 70 ix LIST OF TABLES Table Page 1. Distribution of Wealth .................................................................................................. 55 x CHAPTER 1 INTRODUCTION The influences of globalization and capitalism are undoubtedly great in the twenty- first century. With the influence of globalization and capitalism, is it possible for a socialist democracy to be sustained or, would a decline in state ownership and redistributive policies or a decline in democracy, eventually occur? And what factors would contribute to the stability and sustainability of a socialist democracy? This paper uses Marxist theory as a framework for analyzing these questions. Socialism, sometimes referred to as Marxism, is derived from the original writings of Karl Marx and is used in this paper as a framework for analyzing and understanding the political development of independent nation-states. Chapter 2 provides a summary of the arguments and assumptions Karl Marx makes concerning the political development of independent nation-States. Next, qualitative and quantitative data on the case of Venezuela‟s economic and political development between 1920 and 1976 is discussed. The data provides support for the first hypothesis: three characteristics are inherent in any politically enlightened and developed nation-State: 1. There is an inherent class divide in society and this divide is based upon the ratio of wealth produced to wealth distributed by the modern industry. 2. The existence of this class divide has existed throughout history and has led to political dictatorships of a small possessing class over a large proletariat class. 3. As developments in the world market increase an individual‟s awareness in global society, the proletariat class organizes to abolish the dictatorship of 1 4. a small possessing class over a large proletariat class and institute a more equitable ratio of wealth produced to wealth distributed. (p. 71-7, 136-37, 158-65, 443 – 490, 556 – 76, 594 - 617) Because the evidence supports Marxist theory of political development, Marxism along with more recent research is used as a framework to analyze the data for the second hypothesis: the nationalization of the oil industry created a positive correlation between the market value of petroleum and the stability and sustainability of Venezuela‟s current socialist democracy In the second chapter, Marxist theory is explained in greater detail to provide support for the key assumptions and arguments that lead to the first hypothesis. To be clear, this paper tests Marxist theory regarding the political development of independent nation-States. In order to test this theory on the political development of independent nation-States